* U.S. consumer confidence index rises to highest since Dec.
* Yield curve flattens, flattest since Nov. 9
(Adds comment, byline, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 28 U.S. Treasury debt prices
slipped on Tuesday in generally below-average volume after data
showed a surge in U.S. consumer confidence to a 16-year high.
"This is an impressive gain... and a notable disconnect with
10-year yields under 2.38 percent, but it surely reflects the
ongoing bid for equities," said Ian Lyngen, head of U.S. rates
strategy at BMO Capital Markets in New York.
Lyngen said the data indicated that next week's U.S.
non-farm payrolls report could show more new jobs than expected,
"but we'll caution that it's still early in the data cycle."
The consumer confidence data, however, covered the period
before President Donald Trump's fellow Republicans withdrew
their healthcare plan after promising to abolish former
president Barack Obama's 2010 Affordable Care Act.
The healthcare pullback has boosted Treasuries' safe-haven
appeal in the last few days as investors worried about the Trump
administration's future efforts to boost the economy.
The Conference Board said on Tuesday that the consumer
confidence index hit 125.6 in March, surpassing expectations for
a reading of 114 and much higher than February levels of 116.1.
"Consumers also expressed much greater optimism regarding
the short-term outlook for business, jobs and personal income
prospects," said Lynn Franco, director of economic indicators at
the Conference Board.
In late morning trading, benchmark 10-year notes
were down 1/32 in price to yield 2.378 percent, up
slightly from 2.375 percent on Monday.
Yields on Monday fell as low as 2.348 percent, their weakest
level in a month. They were down from a three-month high of 2.63
percent set on March 14.
U.S. 30-year bond prices were down 3/32,
yielding 2.985 percent, marginally higher than 2.98 percent on
Monday. Yields on Monday had fallen to 2.96 percent, their
lowest since Feb. 28.
U.S. two-year note yields were at 1.273 percent,
up slightly from Monday's 1.267 percent.
The yield gap between shorter-dated and longer-dated
Treasuries shrank on Tuesday, with the spread between the
two-year and 10-year at 110 basis points, its
flattest since Nov. 9, a day after the election.
A flat yield curve is often an early warning sign of a
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu
Nomiyama and Lisa Von Ahn)